Correlation Between Check Point and Fannie Mae
Can any of the company-specific risk be diversified away by investing in both Check Point and Fannie Mae at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Check Point and Fannie Mae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Check Point Software and Fannie Mae, you can compare the effects of market volatilities on Check Point and Fannie Mae and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Check Point with a short position of Fannie Mae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Check Point and Fannie Mae.
Diversification Opportunities for Check Point and Fannie Mae
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Check and Fannie is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software and Fannie Mae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fannie Mae and Check Point is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Check Point Software are associated (or correlated) with Fannie Mae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fannie Mae has no effect on the direction of Check Point i.e., Check Point and Fannie Mae go up and down completely randomly.
Pair Corralation between Check Point and Fannie Mae
Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Fannie Mae. But the stock apears to be less risky and, when comparing its historical volatility, Check Point Software is 4.12 times less risky than Fannie Mae. The stock trades about -0.08 of its potential returns per unit of risk. The Fannie Mae is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Fannie Mae on September 21, 2024 and sell it today you would earn a total of 120.00 from holding Fannie Mae or generate 82.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 93.02% |
| Values | Daily Returns |
Check Point Software vs. Fannie Mae
Performance |
| Timeline |
| Check Point Software |
| Fannie Mae |
Check Point and Fannie Mae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Check Point and Fannie Mae
The main advantage of trading using opposite Check Point and Fannie Mae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point position performs unexpectedly, Fannie Mae can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fannie Mae will offset losses from the drop in Fannie Mae's long position.| Check Point vs. Toyota Motor Corp | Check Point vs. SoftBank Group Corp | Check Point vs. OTP Bank Nyrt | Check Point vs. Hershey Co |
| Fannie Mae vs. Samsung Electronics Co | Fannie Mae vs. Samsung Electronics Co | Fannie Mae vs. Hyundai Motor | Fannie Mae vs. Reliance Industries Ltd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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